For years, Tilray Brands (TLRY 7.46%) has been an incredibly risky investment to hang on to, generating brutal returns. During the past five years, it has lost 95% of its value. Between its lackluster prospects and poor financial results, the business has simply not given investors much of a reason to be bullish about its future.
Earlier this month, however, the company posted some encouraging results. Its top line hit a new record, and on the bottom line it drastically reduced its losses. Are these signs that the company is moving in the right direction, and is it worth investing in Tilray Brands today?
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How Tilray was able to improve its numbers this past quarter
On Jan. 8, Tilray released its second-quarter earnings for fiscal 2026 (ended Nov. 30). Revenue totaled $217.5 million. Although that was a record for the top line, it was an increase of just 3% year over year.
The good news is that it also achieved a 36% rise in international medical cannabis sales. But its growth in other areas was far less impressive. Its beverage sales, for instance, declined by 21% to $50.1 million.
Its operating loss came in at $22.3 million for the period, which was an improvement from a loss of $42.2 million a year ago. Tilray was able to do this as restructuring costs declined by nearly $6 million and amortization expenses fell by close to $19 million. Those two factors alone were able to improve its bottom line and offset a declining gross profit, which fell 6% to $57.5 million.
The company posted some improved numbers this past quarter, but they definitely don't seem as impressive when taking a deeper look at the results.
Question marks continue to linger
Tilray's growth hasn't been all that strong in recent years; at best, it's been choppy. At times, it has received a boost from acquisitions, particularly in its beverage segment, that have resulted in short-term gains for the business. It's the consistent organic growth that investors will want to see to be convinced that this truly is a strong growth stock.
NASDAQ: TLRY
Key Data Points
President Donald Trump signed an executive order last month to reschedule marijuana from a Schedule I substance down to Schedule III, but this mainly makes it easier to do research with cannabis and lowers tax bills for companies that are based in the U.S. They still can't, however, transport marijuana across state lines.
Marijuana legalization is by no means around the corner in the U.S., which is what Tilray and other Canadian cannabis companies are hoping for, because that would drastically improve their growth prospects.
Tilray is risky and might only appeal to speculative investors
For traders, there is an opportunity to generate gains from Tilray because when there's excitement in the cannabis industry, the stock often soars, as it did in December amid the rescheduling news. But as a long-term investment, it's difficult to make the case that this is a stock worth investing in, given all the uncertainty around its future.
Time and time again, the stock has climbed in value due to short-term developments and hype, only to end up giving back those gains. The company's fundamentals and prospects are still underwhelming, and until it can give investors more of a reason to be optimistic about its long-term prospects, it will be a very risky and volatile stock.
Whether you're a short-term trader or a long-term investor, you will want to tread carefully with Tilray, and you will definitely need to have a high risk tolerance. This is not a stock for the faint of heart.
